Correlation Between Black Rock and Rea
Can any of the company-specific risk be diversified away by investing in both Black Rock and Rea at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Black Rock and Rea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Rock Mining and Rea Group, you can compare the effects of market volatilities on Black Rock and Rea and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Black Rock with a short position of Rea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Rea.
Diversification Opportunities for Black Rock and Rea
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Black and Rea is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Rea Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rea Group and Black Rock is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Black Rock Mining are associated (or correlated) with Rea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rea Group has no effect on the direction of Black Rock i.e., Black Rock and Rea go up and down completely randomly.
Pair Corralation between Black Rock and Rea
Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Rea. In addition to that, Black Rock is 3.85 times more volatile than Rea Group. It trades about -0.31 of its total potential returns per unit of risk. Rea Group is currently generating about -0.06 per unit of volatility. If you would invest 24,216 in Rea Group on September 13, 2024 and sell it today you would lose (525.00) from holding Rea Group or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Rock Mining vs. Rea Group
Performance |
| Timeline |
| Black Rock Mining |
| Rea Group |
Black Rock and Rea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Rock and Rea
The main advantage of trading using opposite Black Rock and Rea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Rock position performs unexpectedly, Rea can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Rea will offset losses from the drop in Rea's long position.| Black Rock vs. Northern Star Resources | Black Rock vs. Evolution Mining | Black Rock vs. Bluescope Steel | Black Rock vs. Sandfire Resources NL |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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